NEC (6701) AI Stock Analysis

• Market Cap: $5.66T
• Dividend Yield: 0.67%
• Average Volume (3M): 4.08M
• Price to Earnings (P/E): 31.7
• Beta (1Y): 1.05
• Revenue Growth: -1.55%
• EPS Growth: 17.21%
• Country: JP
• Employees: 105,276
• Sector: Technology
• Sector Strength: 91
• Industry: Information Technology Services
• EPS (TTM): 77.80
• Shares Outstanding: 1,364,249,300
• 10 Day Avg. Volume: 3,801,870
• 30 Day Avg. Volume: 4,080,716
• PEG Ratio: -0.62
• Price to Book (P/B): 2.82
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 25.26
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $4,162.12
• Price Target Upside: -0.24% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 8

• Rating: 77 Outperform
• Price Target: ¥4,489.00 ▲(7.60%Upside)

NEC has a strong financial profile with robust earnings and cash flow, supported by positive earnings call guidance. However, valuation concerns and potential technical corrections due to overbought conditions slightly dampen the outlook. The company's efforts to improve profitability and strategic investments remain promising.

NEC Business Overview & Revenue Model

Company Description

NEC Corporation operates as a provider of information and communication technology solutions in Japan and internationally. The company operates in five segments: Public Solutions, Public Infrastructure, Enterprise, Network Services, and Global. It provides systems integration services comprising systems implementation and consulting; maintenance and support services; outsourcing and cloud services; and system equipment. The company also offers network infrastructure products, including core network equipment, mobile phone base stations, optical transmission systems, and routers and switches; and services and management solutions, such as operation support system (OSS), business support system (BSS), and services. In addition, it provides safer city solutions, including public safety, digital government, and digital finance; software services for service providers, including OSS/BSS; network infrastructure comprising submarine systems and wireless backhaul; and system devices, such as display and projectors, and energy storage systems. Further, the company offers hardware products, such as servers, mainframes, supercomputers, storage products, business and personal computers, point-of-sale systems, automatic teller machines, control equipment, and wireless LAN routers; and software products, including integrated operation management, application servers, security, and database software. It serves public, healthcare, government and media, manufacturing, retail and services, telecommunications, and finance industries. NEC Corporation has collaboration with Analog Devices, Inc. to provide a 5G Network Massive MIMO Antenna Radio Unit for Rakuten Mobile. The company was formerly known as Nippon Electric Company, Limited and changed its name to NEC Corporation in April 1983. NEC Corporation was incorporated in 1899 and is headquartered in Tokyo, Japan.

How the Company Makes Money

NEC Corporation generates revenue through a diverse array of products and services across its core business segments. The company earns income from its IT services, which include systems integration, cloud services, and cybersecurity solutions, aimed at improving business operations for enterprises and governmental organizations. Additionally, NEC's network solutions segment provides telecommunications infrastructure, including mobile and fixed-line networks, which are essential for global connectivity. The electronic devices business contributes to revenue through the sale of semiconductors and related technologies. Significant partnerships with businesses and governments enhance NEC's ability to deliver comprehensive technological solutions, thereby supporting its earnings. The company's focus on innovation and R&D is also a critical factor in maintaining its competitive edge and driving financial performance.

NEC Financial Statement Overview

Summary

NEC has demonstrated strong financial performance with solid profitability and efficient cost management, reflected in a high net profit margin and strong cash flow generation. The balance sheet is stable, but increasing debt and capital expenditures require cautious monitoring.

Income Statement

NEC has shown robust performance with improving profitability metrics. The gross profit margin stands at 30.99% for the latest year, indicating efficient cost management. The net profit margin has increased to 5.12%, reflecting a solid bottom line. Revenue growth has been positive over the years, although there was a slight dip in the latest year. Both EBIT and EBITDA margins indicate strong operational efficiency, with an EBIT margin of 8.27% and an EBITDA margin of 12.41%.

Balance Sheet

The balance sheet of NEC shows a healthy equity base with a debt-to-equity ratio of 0.34, suggesting moderate leverage. The return on equity is 8.97%, demonstrating effective use of equity financing. With an equity ratio of 45.23%, the company maintains a balanced capital structure. However, the increase in total debt over the years warrants cautious monitoring.

Cash Flow

NEC's cash flow statement reflects strong cash generation capabilities. The free cash flow has grown consistently, with a free cash flow to net income ratio of 1.24, highlighting robust cash earnings relative to net income. The operating cash flow to net income ratio of 1.97 further underscores healthy cash conversion from operations. The trajectory of free cash flow growth is positive, though capital expenditures have increased, which may impact future free cash flow if not managed.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.42T	3.48T	3.31T	3.01T	2.99T
Gross Profit	1.06T	1.01T	958.25B	886.41B	861.18B
EBITDA	424.89B	375.71B	353.75B	313.06B	331.06B
Net Income	175.18B	149.52B	114.50B	141.28B	149.61B
Balance Sheet
Total Assets	4.32T	4.23T	3.98T	3.76T	3.67T
Cash, Cash Equivalents and Short-Term Investments	584.62B	476.49B	435.24B	448.33B	532.92B
Total Debt	666.36B	548.64B	608.48B	597.38B	702.86B
Total Liabilities	2.24T	2.14T	2.07T	1.98T	2.11T
Stockholders Equity	1.95T	1.92T	1.62T	1.51T	1.31T
Cash Flow
Free Cash Flow	218.00B	171.46B	74.41B	76.41B	203.97B
Operating Cash Flow	344.41B	271.23B	152.13B	147.52B	274.91B
Investing Cash Flow	-242.17B	-76.02B	-49.59B	-63.38B	-122.49B
Financing Cash Flow	7.03B	-155.51B	-122.79B	-189.62B	1.39B

NEC Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4172.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:6701, the sentiment is Positive. The current price of 4172 is above the 20-day moving average (MA) of 4009.70, above the 50-day MA of 3931.82, and above the 200-day MA of 3130.50, indicating a bullish trend. The MACD of 35.52 indicates Negative momentum. The RSI at 62.76 is Neutral, neither overbought nor oversold. The STOCH value of 83.84 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:6701.

NEC Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
6701	77 Outperform	$5.66T	31.73	8.97%	0.67%	-1.55%	17.21%
Sector *	50 Neutral	C$3.11B	2.54	-63.57%	2.26%	4.49%	-6.15%
FJTSF	―	$40.92B	27.93	11.70%	0.04%	―	―
NTTDF	―	$37.63B	44.28	7.94%	0.02%	―	―
NURAF	―	$21.25B	33.08	22.20%	0.04%	―	―
9719	74 Outperform	¥1.37T	30.49		1.62%	24.10%	11.27%
3626	73 Outperform	¥1.08T	21.59		1.51%	4.13%	5.66%

NEC Corporate Events

NEC Announces Segment Revisions for Enhanced Financial Clarity

NEC Corporation has announced a revision of its organizational segments, effective from April 1, 2025. This change will be reflected in the company’s consolidated financial results starting from the first quarter of the fiscal year ending March 31, 2026. The reorganization aims to streamline operations and potentially improve financial transparency and performance, impacting stakeholders by clarifying the contribution of acquired companies to NEC’s overall earnings.

The most recent analyst rating on (JP:6701) stock is a Buy with a Yen3120.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.

NEC Corporation Records Gains from Retirement Benefit Trust Assets

NEC Corporation announced the recognition of gains from the return of overfunded retirement benefit trust assets, amounting to 140,000 million yen, with a recorded gain of 52,700 million yen as extraordinary income for the fiscal year ending March 31, 2026. This financial maneuver is expected to have no impact on NEC’s consolidated financial results, as they adhere to International Financial Reporting Standards (IFRS), but it highlights the company’s strategic management of its financial resources.

The most recent analyst rating on (JP:6701) stock is a Sell with a Yen11700.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.

NEC Announces Corporate Restructuring to Enhance Competitiveness

NEC Corporation has announced a corporate restructuring involving a simplified absorption-type split, transferring shares of its subsidiaries, NEC Nexsolutions, Ltd. and NEC Networks & System Integration Corporation, to NESIC Holdings, Ltd., a wholly-owned subsidiary. This strategic move aims to enhance competitiveness, improve management efficiency, and facilitate rapid decision-making, aligning with NEC’s broader business reorganization strategy to strengthen its market position and operational capabilities.

The most recent analyst rating on (JP:6701) stock is a Sell with a Yen11700.00 price target. To see the full list of analyst forecasts on NEC stock, see the JP:6701 Stock Forecast page.

NEC Corporation Announces Increased Year-End Dividend and Share Split

NEC Corporation announced a decision by its Board of Directors to distribute dividends to shareholders, with a year-end dividend of 70 yen per share, totaling 18,683 million yen. This decision reflects an increase from the previous year’s dividend, highlighting NEC’s financial stability and commitment to rewarding its shareholders. The announcement also noted a share split effective April 1, 2025, which impacts the calculation of dividends for fiscal years 2024 and 2025. This move is likely to enhance NEC’s market position and shareholder value, while also adapting to market conditions and strategic growth plans.

NEC Corporation Reports Strong Profit Growth Despite Revenue Decline

NEC Corporation reported its consolidated financial results for the fiscal year ended March 31, 2025, showing a slight decline in revenue by 1.5% to 3,423,431 million JPY. However, the company achieved a significant increase in operating profit by 36.4% and net profit attributable to owners of the parent by 17.2%. The results indicate a strong operational performance despite a challenging market environment, with improvements in profitability and return on equity. The company also announced a share split effective April 1, 2025, which is expected to enhance liquidity and make shares more accessible to a broader range of investors.